Indian casinos generate $14.5B a year

File photo

Gambling is big business at the Mashantucket Pequot Tribal Nation's Foxwoods Casino in Ledyard, Conn.

By CRAIG RIMLINGER and IAN SALISBURY ~ Medill News Service - 9-3-03

WASHINGTON

he situation is reminiscent of the Internet boom of the ’90s: Skyrocketing profits. Exponential growth. Thousands of new jobs. The success of Indian casinos has been remarkable since they were legalized only 15 years ago.

Numbers tell the story:

• In 1988, there were approximately 70 Indian gaming facilities nationwide. Today, the majority of federally recognized tribes - 330 out of 558 - own casinos.
• Gross revenues from tribal casinos has jumped from $212 million in 1988 to $14.5 billion today, gaining ground on the nation’s 430 commercial casinos, which generated $27 billion in revenue in 2002.
• Of the $14.5 billion in tribal casino revenue, 10 to 30 percent is net income, said Joseph Eve, a Montana accountant who works with several tribes.

Much of the rapid growth has occurred during the past four years despite a National Gambling Impact Study that recommended a moratorium on the expansion of gambling until its effects on society could be measured.

But tribes need the money casino gambling generates, supporters say.

“In my view, the benefits from Indian gaming are just a tiny down payment on the deficit of stupendous social and economic needs facing the vast majority of Native American citizens,” wrote Robert Loescher, the sole American Indian to sit on the federal gambling commission.

To supporters like Loescher, Indian gambling is a bingo hall in a trailer park that generates a few thousand dollars a year for the reservation’s schools, medical facilities and other essential needs. But to detractors, Indian casinos represent a gambling monopoly that states had no choice but to grant - a sin industry playing entirely by its own rules.

While the tribes have come under increasing scrutiny for fiscal mismanagement, they have failed to a large extent to defend themselves by not disclosing their earnings, citing their unique status as sovereign nations.

“Sovereignty is the most important issue of the tribes,” says William Eadington, an economics professor and director of the Institute for the Study of Gambling and Commercial Gaming at the University of Nevada-Reno.

States do not have the right to prevent a tribe from building a casino due to the 1987 Supreme Court decision in California vs. Cabazon Band of Mission Indians and the Indian Gaming Regulatory Act of 1988.

“Our tribes have the understanding with the United States that our lands were to serve as homelands, and the idea behind the homeland is that people will have a viable way of life on our own land,” he said.

Tribes are reluctant to discuss profits from their casinos, perhaps because some are very lucrative.

“Often, it’s very hard information to get. It’s often very controversial,” Eadington said.

States aren’t allowed to tax Indian casinos. But Connecticut’s two Indian casinos, Foxwoods and Mohegan Sun, pay the state 25 percent of their slot-machine revenue to guarantee the exclusive right to operate casinos in the state.

The Connecticut compact is often cited as a model, but most other states get far less. The Oneida tribe in Verona, N.Y., reportedly pays nothing to the state.

The tribes do face some federal oversight. They must submit an annual audit to the National Indian Gaming Commission, but it is publicly bound to report only whether the tribe has submitted the necessary paperwork, not what the casino records showed.

A published report from 2000 said the small Shakopee Mdewakanton Sioux Community in Minnesota provides each of its 300 members with about $75,000 monthly while also donating $23.5 million in charity during the past five years.

While Indian gambling proponents acknowledge that some tribes have become wealthy, they counter that most tribes need the money for basic infrastructure. Of the 300 tribes that operate gaming operations, they argue, it is only a handful that has struck it rich.

“Most tribes lack the tribal enterprises and revenue from outside government support and they are trying to diversify in order to provide services to the tribes. Basic services, such as health, housing program, youth facilities,” Loescher said.

Census data shows Indian tribes continue to languish behind the remainder of the country in terms of personal income.

Average per-capita income for Indians was $12,893, according to the 2000 census, well below the national average of $21,587.

On the other hand, the successful Shakopee Mdewakanton Sioux reported per-capita income of $84,500, making the reservation easily richer than Scarsdale, N.Y., or Beverly Hills, Calif.

The new gambling fortunes of a select few tribes are helping to finance the Native Americans’ lobbying quest to keep casinos operating, which has put one aspect of tribal spending in the public domain: political contributions to lawmakers.

According to the nonpartisan Center for Responsive Politics, the industry gave $1,750 in the 1990 election cycle. For the 2002 election cycle, the number jumped to about $6.6 million.

“I would be more surprised to see any industry that grows that fast and is that heavily regulated not give money,” said Larry Noble, executive director of the campaign finance watchdog group.

The tribes also have a strong presence in state government.

In the crowded California gubernatorial race, Democratic Lt. Gov. Cruz Bustamante is reported to be receiving upward of $10 million from the Indian gaming industry for his campaign. This at a time when there is vigorous opposition in California’s Sonoma County to an Indian casino being built.

At an August 2000 ceremony in Los Angeles honoring tribal sovereignty, Bustamante told an Indian Country Today reporter: “If people could have seen tribal lands prior to gaming, even the most hardened minds would be softened.”